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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 8-2 Recording Closing Entries.

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Presentation on theme: "CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 8-2 Recording Closing Entries."— Presentation transcript:

1 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 8-2 Recording Closing Entries

2 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 8-2 NEED FOR THE INCOME SUMMARY ACCOUNT page 207

3 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 8-2 (Debit to close) CLOSING ENTRY FOR AN INCOME STATEMENT ACCOUNT WITH A CREDIT BALANCE page 208 1 2 3 4 1.Write the heading. 2.Write the date. 3.Write the title of the account debited. Record the debit amount. 4.Write the title of the account credited. Record the credit amount.

4 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 8-2 (Credit to close) CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES page 209 1 24 4.Debit amount 3.Credit 2.Income Summary 1.Date 3

5 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 8-2 (Income Summary: debit to close) (Capital: credit to record net income) CLOSING ENTRY TO RECORD NET INCOME OR LOSS AND CLOSE THE INCOME SUMMARY ACCOUNT page 210 3.Credit 2.Debit 1.Date 1 2 3

6 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 8-2 (Credit to close) CLOSING ENTRY FOR THE OWNER’S DRAWING ACCOUNT page 211 3.Credit 2.Debit 1.Date 1 2 3

7 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 8-2 TERMS REVIEW permanent accounts – accounts used to accumulate information from one fiscal period to the next They DO NOT close; Balance Sheet Accounts temporary accounts – accounts used to accumulate information until it is transferred to the owner’s capital account They ALL close; ALL income statement accounts + drawing closing entries – journal entries used to prepare temporary accounts for a new fiscal period page 212


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